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Tuesday, July 26, 2011
NFL lockout question: Was it worth it?

By Lester Munson
ESPN.com

NFL owners and players finally are entering into an agreement that will end the lockout and govern the league's labor relations for the next 10 years. Numerous questions still linger, however, about the owners' decisions that led to the lockout, the union's decisions on decertification and litigation, and judges' decisions that came during the lockout. Here are some of the questions and their answers:

The owners spent three years preparing for the lockout. Was it worth it for them?

I am not sure it was worth it. The owners spent millions in legal fees in an effort to change American antitrust laws, hoping to achieve immunity for their league from decertification and litigation. In a maneuver that stunned lawyers, judges and legal scholars throughout the nation, they used a case (American Needle v. NFL) they had already won as a vehicle to demand a change in the law. It was a disaster. The owners lost by a rare 9-0 vote in the U.S. Supreme Court.

The owners also renegotiated network television contracts to require payments to the league during a lockout, demanded lockout clauses in coaching contracts and hired the attorney, Robert Batterman, who led the NHL's season-long lockout in 2004. None of it really made much difference. In the end, old-fashioned, across-the-table bargaining led to the agreement.

The players walked out of a mediation session March 11, decertified and sued the owners. Was it worth it for the players?

This will sound familiar if you read the answer to the previous question. I am not sure it was worth it. It is clear commissioner Roger Goodell offered the guaranteed annual increase in player salaries in the mediation in March as the old contract was expiring. The commissioner's offer was a major first step in what has now led to a 10-year partnership. But instead of continuing to discuss the offer and refine it into something acceptable, the players followed their plan, ending any serious mediation effort March 11, decertifying their union and filing two major lawsuits against the owners.

It is easy to understand why the players followed that plan. It worked brilliantly in the process that led to the historic 1993 free-agency agreement. The players were reasonable in their expectation that the process would work again. But with a major concession from the owners on the table, it might have been better to delay the decertification-litigation plan for a few days to try to bargain a deal.

Who are the winners and losers in this agreement?

Rookies and their agents are the losers. Rookie bonuses and contracts will be significantly reduced with a four-year salary program and a team option on a fifth year. The rookie payment program includes a provision that will benefit agents in the third year of a rookie's contract, but agents who until now have relied on rookie bonanzas will be forced to find other forms of income. The winners are retired players. A $1 billion "legacy fund" in the agreement is new, although both the league and the players have been moving toward benefits for retired players over the past couple of years. Some of the money for the older players will come from the money saved on rookie contracts.

Demaurice Smith
DeMaurice Smith and Roger Goodell could finally find something to laugh about Monday.

And all players are winners in the new program that will provide lifetime health insurance when their playing days end. Each player will have to contribute to the program, and they might not like that in the short term. But as long as the U.S. persists in the idea that health insurance is linked to employment -- in this case, their employment as football players -- this new benefit is the best they could hope for. They'll get used to it and learn to appreciate it.

At the start of this process, the owners wanted to take $1 billion of NFL income, a demand that would have cost the players $500 million (their 50 percent of league revenue) in league-wide salaries. What actually happened?

The players refused to consider the idea of giving back salaries they had won in litigation and bargaining. A $500 million decrease in players' salaries was, they said, completely unacceptable. In the final bargain, it is clear that there not only will be no decrease in players' salaries, but there will be annual increases in each of the next 10 years. The increases will come from the annual increases in revenue that the NFL enjoys. Unlike most American businesses in an uncertain economy, the NFL thrives and grows. Focusing on the growth and the increased revenue, the players and the owners found a way to both pay the players increased salaries and allow for increasing profits for owners.

The lawsuits led to an injunction that ended the lockout, a reversal of that injunction, and a preliminary opinion that the league's renegotiation of its network television contracts might have violated the old agreement between the owners and the players. How important were these developments?

They were less important than the lawyers and the judges would care to admit. The decisions on the lockout injunction went one way and then the other way. The owners managed to keep their lockout alive, but it did not have the divisive effect on the players that the owners expected and the union leadership feared.

The most important decision is a decision that was not made. Federal district judge David S. Doty, who presided over the 1993 collective bargaining agreement for 18 years, could have made a dramatic decision in the TV networks lawsuit. Although he indicated he was not happy with the owners' renegotiation of their network contracts at the expense of the players, he deferred a final decision when he saw that the owners and the players were in serious negotiations. Instead of throwing a bomb into the process, he waited patiently and judiciously while the negotiations continued. If he had issued a ruling, it would have changed the topography of the dispute and postponed any serious bargaining, jeopardizing the 2011 season. His deferral of any decision allowed the two sides to continue to talk and to reach an agreement.

Could this agreement have been made without the histrionics? In other words, in retrospect, could the owners' lockout of the players and the players' decertification of their union and their litigation against the owners have been avoided?

Looking at the terms of the agreement (and with the benefit of hindsight), this appears to be the kind of agreement that could have been negotiated without the lockout, without the decertification and without the litigation. None of the terms seem to involve the kind of path-breaking, precedent-shattering ideas that come from a successful work stoppage or antitrust litigation. No new rights were established. No new procedures were developed. The agreement maintains most of the basic structures that were in place when the old deal expired March 12. The changes are the kind that result from the players and the owners working together, exchanging information, drawing upon their experiences under the former arrangement and finding common ground.

Neither side had the kind of overpowering leverage that leads to surrender on an important issue. As a point of reference, the players' victories in antitrust litigation in the early 1990s led to the establishment of free agency and a bonanza of bonuses and salaries. There is nothing remotely similar in this settlement. The agreement came when the two sides ignored the court cases and focused on the important issues. It is a product of bargaining -- reluctant bargaining, but bargaining nonetheless -- that became productive as the two sides began to understand each other.

Why was this process so complicated? Why did it take so long?

Two factors complicated the bargaining process. The first is that DeMaurice Smith was leading the players through collective bargaining for the first time. The owners will never admit it, but it is likely that some of them thought they could take advantage of his supposed inexperience. If they did, they were wrong. As the process moved along, Smith proved that the players had made an excellent choice when they hired him. His leadership was effective, his negotiating was dexterous and his public statements were powerful. Once the owners realized they were dealing with a formidable leader, they moved closer to an agreement.

It was, of course, also Goodell's first venture into bargaining with the players. But Goodell had worked for the NFL in various capacities for decades, and enjoyed the support of Jeff Pash and Dennis Curran, two brilliant lawyers who had been through the litigation and the bargaining in the early '90s. Goodell was not new to the owners in the way in which Smith was new to the players.

The second factor that prolonged the process is that the same players who swagger confidently on the playing field face serious insecurities when dealing with finances, agents and lawyers. They are uniquely vulnerable to anyone who tells them the owners are not showing them proper respect and are treating them as dumb or expendable. Smith's greatest challenge was not the owners. His greatest challenge was to educate and inform his players, to overcome their natural insecurities, and to bring them together in a confident and coherent commitment to a partnership with the owners. The fiasco Thursday evening, when players reacted viscerally to the owners' sudden approval of an agreement the players had not seen, is a perfect example of the difficulty in making a deal that involves 1,900 elite athletes. Once they realized it was not a sneak attack and that it was the agreement they had negotiated for months, they were ready to vote to approve it.

Lester Munson, a Chicago lawyer and journalist who reports on investigative and legal issues in the sports industry, is a senior writer for ESPN.com.

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